THE MINISTRY of Defence wants to build Britain's first multi-billion-pound ballistic-missile defence system to protect against the threat of attacks from Libya, Syria and Iran.

The system would use anti-missile technology already being developed in America, including aircraft-mounted lasers or Patriot missiles linked to satellites or radar, and would be introduced early next century.

Defence officials believe the system is necessary to counter the threat from a new generation of cheap ballistic missiles being built by "rogue" nations whose
expanding arsenals could within 10 years bring the whole of Europe within range of a nuclear, chemical or biological strike.

The conclusion has been reached following a top secret 18-month study commissioned from British Aerospace and other advisers. Whitehall officials were so alarmed at the report that they banned its publication and cancelled a conference to discuss it.

United Nations inspectors confirmed the dangers when they announced last week that Iraq may be working on long-range missiles which could be launched against London.

Ministers are considering the proposals but are concerned that if they announce
plans for a new defensive system there will be an international outcry. A ballistic-missile defence system would breach the 1972 Anti Ballistic Missile treaty which was designed to ensure stability during the cold war.

The report says that European capitals and ports could be at risk from missile attacks by 2005 from "unstable dictatorships" such as Libya and Syria. It also examines the current and future threats to mainland Britain and to British forces overseas.

"The conclusions are quite clear," said a defence ministry source. "The threats
are there and the likeliest is a one-off attack against our troops in the field.
That is what we need to defend against first."

Britain would need the co-operation of the United States to develop and build such a system, which would cost billions of pounds. Defence officials are urging ministers to commit to one of several systems that are already under development. The most promising of these is a laser mounted on a converted Boeing 747 aircraft that could destroy missiles soon after launch. America plans to deploy up to seven such lasers at a cost of L4 billion by 2003. Other systems under development include an improved version of the Patriot missile that saw service in the Gulf war against Iraqi Scuds.

The Americans are already involved with Germany and Italy in developing a so-called Medium Extended Air Defence System, but this has been in financial trouble since the French dropped out last year leaving America to pick up most of the bill.

"The UK cannot possibly do this alone economically or technically," said Dr Stanley Orman, a former senior MoD expert in strategic systems who now runs a consulting firm in Washington. "Europe is such a crowded area that any defence has to be done co-operatively."

Already, 38 nations have ballistic missiles with a range of 300km or more that can directly threaten British forces deployed in military operations outside the
Nato area.

Leading the race is probably North Korea, which has a history of developing new weapons and selling them to anyone with the cash to buy them. Currently, the regime is about to deploy the NoDong-1 with a range of 1,000km. The Taepodong-2 missile with a 4,000km range is under development. Western intelligence agencies believe that the new missile is being funded in part with contributions from countries such as Iran and Syria, which have long-standing links with the Pyongyang regime.

"North Korea presents a two-headed problem," said Wyn Bowen, a senior research associate at the Centre for Nonproliferation Studies at the Monterey Institute of International Studies. "Not only are they developing the technology for their own missile programme, they are also selling it to countries of concern, such as Libya, Iran and Syria." The half-inch-thick report was written by Bruce Mann, the head of Whitehall's defence policy staff, and circulated to defence chiefs earlier this month. The Royal United Services Institute for Defence Studies in Whitehall had planned to hold a conference on March 18 sponsored by the defence ministry. However, faced with the prospect of spelling out the results of its study, Whitehall withdrew its support and the conference was postponed indefinitely.